Crossing Our Desk:

- Even before the public-comment period opens up for Benjamin Lawsky‘s bitlicense proposal, public comments are indeed being made.

Over on reddit is where you’ll find the most, ah, robust discussion. Mr. Lawsky, the superindent of the New York State Department of Financial Services, took to the famously freewheeling website to start a thread about his proposed bitlicense. “Hi, this is Ben Lawsky at NYDFS,” he started off, simply enough.

“You are creating a few dangerous barriers to entry and there is a huge glaring problem with the definition of virtual currency business activity,” one writer said. It’s one of the more even-tempered comments.

“Statists gonna state,” on respondent wrote.

“In what universe is that insanity reasonable?” said another.

“Ben Lawsky just killed New York as a center for financial crypto innovation,” said a third, and our sampling of comments is severely limited by our own style guidelines, which prohibit offensive language. Suffice it to say, reddit has no language filters.

The reddit responses generally fell into a couple of broad themes: Mr. Lawsky and the department were going to force bitcoin business overseas, Mr. Lawsky and the department were condemning themselves to obsolescence, or Mr. Lawsky and the department deserves credit for trying to honestly an intelligently craft a framework for integrating cryptocurrencies into the existing regulatory framework. As you might imagine, given the general disposition of the bitcoiners on reddit, that last was a minority opinion.

When he started the thread, Mr. Lawsky said he’d “try to stop by… and chime in from time to time.” So far, it appears that he hasn’t chimed in again.

If you’re interested in making a formal comment on the proposal as part of the state regulatory process, the open-comment period begins Wednesday. (Paul Vigna)

- All that’s to be expected. “I think there are a number of people who are disappointed, and that’s not entirely surprising,” said Carol Van Cleef, a partner at the law firm Manatt, Phelps & Phillips. Ms. Van Cleef, whose expertise is in payments systems, testified at the DFS’s Janaury meeting on virtual currencies.

But no matter how bitcoin’s libertarian, crypto-anarchist wing reacts, the reality is that the bitlicense essentially codifies what’s been emerging as best regulatory practices in the financial industry, and pulls cryptocurrency firms under that umbrella, she said. ”I think New York has done a good job thinking through the issues,” she said.

One problem with the proposed regulations, she pointed out, is that it puts smaller players at a disadvantage and put some pressure on innovation. “That’s going to be a challenge,” she said, imagining a scenario might arise where larger players end up as incubators of sorts for smaller firms.

Of course, startups could just chose to stay out of New York, block addresses from the Empire State and do their business elsewhere. But that comes with a trade-off, she noted. “The issue is that New York is one of the top markets in the U.S. New York’s important, but it New York absolutely essential?” That will be a choice businesses will make on their own.

As for the comment period, she had some advice for critics of the proposal: “There needs to be constructive comments on specific issues,” she said, and there has to be enough of them to reach a critical mass. (Paul Vigna)